Countrywide Bank primarily originates and purchases mortgage loans and home equity lines of credit for investment purposes.

In November 2005, Barclays announced that it intended to terminate the third party administration arrangement with GHL and bring the mortgage originations and servicing operations back in-house.

Countrywide maintains a policy of not filing the legally required Internal Revenue Service Form 1099 to independent brokers.

The company also agreed to improve training and oversight of its loan officers and to pay New York state $200,000 to cover costs of the investigation.

[12] Countrywide subprime documents show a policy of lending to families with as little as $1000 of disposable income, often compromising their ability to pay living expenses.

Economist Stan Liebowitz writes that the Fannie Mae Foundation singled out Countrywide Financial as a "paragon" of a nondiscriminatory lender who works with community activists, following "the most flexible underwriting criteria permitted."

The chief executive of Countrywide is said to have bragged that in order to approve minority applications, "lenders have had to stretch the rules a bit."

The article also noted Countrywide's political action committee had made large donations to Dodd's campaign.

[17] It was reported that James Johnson, former CEO of Fannie Mae and an adviser to presidential candidate Barack Obama, had received loans under the "Friends of Angelo".

[18] Johnson announced he would step down from the vice-presidential vetting position on June 11, 2008, in order to avoid being a distraction to Obama's campaign.

In June 2008 The Wall Street Journal reported that Franklin Raines, a former CEO of Fannie Mae, received below market rates loans at Countrywide Financial because the corporation also considered him an "FOA".

[19] On July 16, 2008, The Washington Post reported that Franklin Raines had "taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing policy matters.

[21] The office of Attorney General of Illinois, Lisa Madigan, filed a civil lawsuit in Cook County Circuit Court against Countrywide Financial Corporation on June 25, 2008.

"[22][23] California Attorney General, Jerry Brown, followed suit by filing a similar lawsuit on June 25, 2008, accusing the lender of breaking the state's laws against false advertising and unfair business practices.

The states currently involved in the settlement are Arizona, California, Connecticut, Florida, Iowa, Michigan, North Carolina, Ohio, Texas, and Washington.

Alt-A mortgages (loans given to apparently creditworthy borrowers without much or any documentation) completely stopped at ratings lower than AAA.

There can be no assurance, however, that the Company will be successful in these efforts, that such facilities will be adequate or that the cost of debt will allow us to operate at profitable levels.This raised speculation that Countrywide was a potential bankruptcy risk.

Fitch, Moody's and Standard & Poor's credit ratings agencies downgraded Countrywide 1 or 2 grades, some to near junk status.

On Thursday, August 16, 2007, the company expressed concerns over liquidity because of the decline of the secondary market for securitized mortgage obligations.

Countrywide also announced its intent to draw on the entire $11.5 billion credit line from a group of 40 banks including JPMorgan Chase.

[36][37][38] At the same time the Federal Reserve Bank lowered the discount rate 0.5% in a last-minute, early morning conference call.

This also helped calm the stock market and investors promptly responded positively with the Dow posting gains.

[45] One proximate cause was reports that the Atlanta Federal Home Loan Bank had extended a large amount of its credit to Countrywide to offset its inability to raise funds in the private market.

Employees were expected to sign a loyalty oath to "demonstrate their commitment to our efforts" and "to tell the Countrywide story to all".

[51][52] After more than six months of financial deterioration at Countrywide—despite a $2 billion infusion of cash from Bank of America in August—Mozilo said he was ready to throw in the towel, according to Lewis.

We weighed the short-term pain versus what we think will be a very good deal for our shareholders.Bank of America deployed 60 analysts from its headquarters in Charlotte, N.C., to Countrywide's headquarters in Calabasas, Calif. After four weeks analyzing Countrywide's legal and financial predicament, and modeling how its loan portfolio was likely to perform, Bank of America offered an all-stock deal valued at $4 billion for Countrywide—a fraction of the company's $24 billion market value a year ago.

[55] Bank of America announced on June 26, 2008, that the takeover of Countrywide Financial Corp. will result in the loss of 7,500 jobs over the next two years.

[56] The deal was a landmark in the housing crisis, given Countrywide's prominence as the nation's largest mortgage lender, at the time.

[59][60] Despite these charges, Countrywide, and then its successor Bank of America, were awarded the Property Management contract with the Veterans Administration.

A July 22, 2008, memo from Judith Caden, VA Director of Loan Guaranty Service issued this proclamation in Circular 26-08-10.